UK government unveils 2016 social investment strategy
Ahead of tomorrow’s budget the government has set out its vision to make the UK a 'global hub' for social investment in two strategy documents.
The documents, published by the Cabinet office at the end of last week, focus on the government’s plans to develop the social investment market in the UK and ensure that the UK remains a global leader in this field.
In the Social investment: a force for social change 2016 strategy publication, Minister for Civil Society Rob Wilson wrote: “We have ambitious plans for social investment over this Parliament and it remains a crucial element in the creation of a bigger, stronger society… Social investment can accelerate the growth of new businesses, transforming the impact of our public services, and support stronger communities to tackle the social challenges that they face.
“It has the power to transform lives and I am more committed than ever to helping social investment achieve its full potential.”
The UK-focussed report highlights key trends among social investors, including the observation that Big Society Capital is now investing at a faster rate. In 2014 the social investment wholesaler had drawn down £104m in comparison to over £224m in 2015. It also describes the important role blended finance has had in opening up new sources of capital to the social investment market. There are an estimated 74 pooled public and private funds globally – including the Arts Impact Fund and the Dementia Discovery Fund in the UK – which account for a total of £16bn in committed assets.
One of the key commitments made by the government in the strategy report is to ‘use social investment to transform public services’. The government has set out plans to ‘partner with a leading UK university to establish a centre of research and technical excellence on outcomes based commissioning’.
The report also announces the establishment of an £80m Life Chances Fund to accelerate the growth of the social impact bond (SIB) market and help ‘pay for interventions that tackle some of the most difficult and costly social challenges’. An additional £25m will also be committed to SIBs structured to deal with social issues related to homelessness, mental health and employment.
This is still a nascent market and there is a risk that too much is being expected of it too soon.
The second of the two reports focusses on the UK’s position globally. The strategy to ensure the UK remains a leader in social investment internationally will be delivered through policy and communications projects involving the Cabinet Office’s social investment team, UK Trade and Investment (UKTI), the Foreign and Commonwealth Office, the British Council and the Department for International Development.
A dedicated social economy GREAT Britain communications campaign will be launched in targeted markets, efforts to embed awareness of social investment opportunities into UKTI’s existing activity will be made and further conferences, targeted roundtables and policy dialogues will be hosted. The government has selected 10 key markets in which to focus its attention, including the USA, Canada, Bangladesh, France and New Zealand.
Responding to the government’s plans to expand its social investment activity, CEO of Social Investment Scotland Alastair Davis said: “The Government’s strategy for supporting social investment can only help to raise the profile of the sector which has experienced unprecedented growth over the past few years… However, while the strategy for 2016 rightly champions the role of social investment in transforming the impact of public services, we’d also argue that social investment can play a much greater role in supporting a consumer-facing social retail market.
“At present, there is a huge gap in terms of social enterprises trading in products or supply chain. By promoting social enterprise products as viable alternatives to their commercial counterparts, social investment can help to significantly increase the revenues raised by the sector and, in turn, create much more sustainable and long term social impacts for our communities up and down the country.”
Following the announcement in the Chancellor’s 2015 Autumn Statement that a total of £105m will be spent on SIBs, it seems a possibility that social investment will also feature in George Osborne’s budget tomorrow as well. In a report titled A Balancing Act: Charities and the 2016 Budget NPC sounds a note of warning about public sector enthusiasm for SIBs.
Authors Ruth Gripper and Patrick Murray wrote: “If we are to hear more about SIBs in the Budget, NPC will be looking for assurance that they will be used to fund innovation, rather than as a wholesale funding model to replace commissioning and grants for charities.
“SIBs are just one part of the wider social investment landscape. This is still a nascent market and there is a risk that too much is being expected of it too soon. Potential investors face a lack of clarity and transparency surrounding social investment products and regulation. Furthermore, there is insufficient demand from social sector organisations, many of which lack the financial skills and knowledge to manage such investments.”
Photo credit: Joseph Barrientos